Return to 1958 and build a century-old giant

Chapter 920 Initial Layout of Mainland Cinema Chains
Another two weeks later, Yang Wendong summoned Zou Wenhuai. The two drank tea together, and Yang Wendong asked, "What was the total box office revenue for Hong Kong films last year?"

Chow Wen-huai replied, "The total is HK$17.5 billion, and the highest box office record is HK$5200 million."

“5200 million? Not bad.” Yang Wendong recalled that the highest box office record in Hong Kong in his previous life was only 80 million in the 4000s. Even Stephen Chow’s movies fluctuated around this range.
It was still possible to break 80 million in the early 5000s, which was obviously due to the greater prosperity of Hong Kong films, more cinemas, and the stronger economy and population of Hong Kong.
Chow Wen-huai continued, "Last year, many records were broken, but with the economic crisis this year, the Hong Kong film market is probably not doing well."

"That's not necessarily true. In the past, when the US experienced economic crises, the impact on the film industry wasn't significant, so this is a rare form of entertainment," Yang Wendong said with a smile.

Before the internet, people had few entertainment options. When they had money, many would pursue more expensive and exciting activities such as travel. When they didn't have money, they would choose to watch movies instead.

For just a few dollars, you can get about two hours of fun, which is quite cost-effective.

Zou Wenhuai laughed and said, "That's true. However, with the economic crisis, many people have lost their jobs, and there are even more extras. This has reduced the cost of our film production quite a bit."

"Speaking of extras, TVB is planning to build a large film and television city in China. You should discuss your needs with them. This film and television city will be used for both film and television production," Yang Wendong reminded them.
Zou Wenhuai said, "I already know about this matter, and I have already sent a few people to the mainland with the TVB staff to investigate and see which place would be more suitable."

"Okay, good." Yang Wendong nodded and then said, "Old Zou, there's another thing I called you over to. Besides the film studio, I'm planning to start investing in cinemas on a large scale across the country."

It's the fourth year of reform and opening up, and China's acceptance of overseas capital has increased significantly. He needs to prepare to make further investments, not just in cinemas, but also in other areas.
Historically, the decline of Hong Kong cinema was due to two important factors. First, American blockbusters, led by "Jurassic Park," began to impact the Asian and even Hong Kong markets. Second, around the 90s, Southeast Asian countries began to develop their own local cultural industries, which led to legal restrictions on Hong Kong films.

These two issues are the same ones that I have to face in my current era. As for American films, even if I can participate in investment, it is my own business. He can't use that money to subsidize the Hong Kong film market. Therefore, the impact of Hollywood on Hong Kong films is inevitable in the future. The restrictions in Southeast Asia are something that even Yang Wendong can't do anything about.
So, although the thousands of cinemas he had established in Southeast Asia in his early years were still very profitable in terms of real estate and cinema business, they could hardly help Hong Kong films after being impacted by American blockbusters and legal restrictions.
Therefore, expanding into the mainland market became the last straw to save the Hong Kong film market.
Historically, there was actually such an opportunity, but unfortunately, due to various reasons, it ultimately came to nothing, becoming a regret for Hong Kong films. After 93, Hong Kong films began a precipitous decline.

"Investing domestically? In the four special economic zones? Currently, only the four special economic zones allow sole proprietorship," Zou Wenhuai asked.

Yang Wendong said, "Of course we want to invest in the four special economic zones, but I also want to invest in Beijing, Shanghai, Guangzhou, other provincial capitals or second-tier economic cities. You can arrange for someone to go to Beijing to negotiate with the relevant departments to see if we can invest independently. We can discuss foreign exchange settlement. Let's try it out first."

If that doesn't work out, we can consider cooperating with China Resources then.

Currently, domestic policies still require joint ventures outside the four special economic zones, but this is not entirely unnecessarily open to negotiation. Generally speaking, goods that need to be imported into China, or a factory that exports everything, can be operated as a sole proprietorship.

My own cinema can't really meet these requirements, so it's a bit too difficult. I can only say I'll give it a try.
If all else fails, a joint venture with China Resources would be a good option. Once the restrictions on foreign investment are relaxed in China in the 90s, you can buy back the shares from China Resources. However, this needs to be negotiated in advance.

“Okay, I’ll go to Yanjing to test the waters first.” Zou Wenhuai thought for a moment, then added, “Mr. Yang, Taiwan is also a major voting bloc for us. If we invest heavily in the mainland, I’m worried about Taiwan.”

"Ignore them. They can only threaten minor celebrities; our group doesn't need to worry about them," Yang Wendong said nonchalantly. "I've invested quite a bit in mainland China before; have you seen any feedback from them?"

Historically, Taiwan has a policy of blacklisting Hong Kong celebrities who have close ties with the mainland, which has made many celebrities afraid to take any risks.

It's similar now, but in terms of influence, it's still different because Taiwan has a large number of cinemas in Southeast Asia and even Japan, while Taiwan's share of foreign films in Hong Kong films is not very large.
Even so, it was still a big concern for film companies, since there was no market in mainland China at that time.
Knowing the future and the impending crisis for Hong Kong cinema, Yang Wendong needed to prepare several years in advance. At that time, even abandoning the Taiwan market was worthwhile.
Besides, as a top global capitalist, he also has a large number of production orders sent to factories in Taiwan. At least tens of thousands of jobs in Taiwan depend on him. At the same time, Taiwan also wants to obtain high-quality iron ore from his Christmas Creek, so he is not too worried.

This also reflects the influence of top capitalists.

Zou Wenhuai smiled and said, "Okay, I'll arrange it right away."

Time quickly passed to May 1983;
Hong Kong's economic crisis continues, with the stock market sluggish and the property market still experiencing a period of decline.
The influencing factor is naturally each Sino-British negotiation. Basically, after each one ended, it would affect Hong Kong, but most of the time it would be positive news, with only a few times it would be beneficial.
On the 6th, Fang Xianming came to Yang Wendong's office and reported: "Mr. Yang, most of the Hong Kong dollars held by our group's several subsidiaries have been converted into US dollars and British pounds, leaving only Hong Kong dollars for normal operation."

"Okay, but I'm not too optimistic about the pound either. Let's convert it to yen or marks." Yang Wendong nodded and said.
Since World War II, the pound sterling has been in a state of gradual decline. Unless there is a need for investment in Britain, one should not store too much pound sterling.
The Deutsche Mark and the Japanese Yen correspond to the rise of Germany and Japan in the 80s, respectively. The Plaza Accord was not only aimed at the Yen, but also at the Deutsche Mark. After 85, both the Deutsche Mark and the Yen were forced to appreciate. However, Germany did not engage in large-scale real estate speculation afterward, so it did not trigger any major crisis.
Fang Xianming agreed, "Okay."

Yang Wendong then asked, "How is real estate investment in Japan doing?"

Fang Xianming said: "I have already used a large amount of US dollar funds, gradually converted them into Japanese yen, and then used them to acquire shares of Japanese real estate companies on the Japanese stock market;

Zheng Sheng, on the other hand, directly purchased some buildings in Japan, but his transactions weren't very smooth. Although money doesn't prevent him from buying properties, entire buildings or those in prime locations were not easy to acquire.

“Yes, investing in Japanese real estate is indeed a bit troublesome. It’s much more convenient to buy shares of Japanese real estate companies directly, like you have here.” Yang Wendong agreed, “Moreover, stocks are easier to cash out and leave, which is better than real estate.”

Fang Xianming said, "Yes, after all, it is very troublesome for foreign capital to enter the real estate market. Even in Hong Kong, the additional costs for overseas capital to purchase properties are extremely high, which is far less convenient than directly buying the Hang Seng Index."

“Alright, from now on, our main means of investing in the Japanese market will be through you, purchasing shares of large Japanese real estate companies.” Yang Wendong said, “As for Lao Zheng, tell him not to fixate on the Ginza area, it’s comparable to Central, very difficult to buy there.”

He was advised to focus on properties in Osaka, Yokohama, Nagoya, or cities surrounding the Tokyo metropolitan area, as these properties are easy to acquire and easy to sell when the time is right. He also doesn't plan to invest in the Japanese real estate industry long-term, so the ability to easily cash out is a key consideration in his investment strategy.

Fang Xianming said, "Okay, I'll remind him."

"Okay, sure." Yang Wendong nodded and said, "Also, prepare some US dollars. I have other plans."

A Hong Kong dollar crisis is looming, and he needs to be prepared.

Fang Xianming said, "That's no problem. We have a lot of US dollars on hand, and you own shares in several top American companies. These are all high-quality financial assets that can be readily converted into cash in a short period of time."

"Okay." Yang Wendong nodded;
He invested the vast majority of his funds in high-quality American companies. Although it may seem that the funds have been spent, these stocks are top-quality assets recognized by the market. With just a phone call and a procedure, he can easily cash out enough US dollars.

This is the allure of finance;

June arrived quickly, and Zou Wenhuai came to Yang Wendong's office again to report: "Mr. Yang, the conditions on the mainland are that the four special economic zones can establish cinema chains on their own, while other places need to form joint ventures with domestic companies, with domestic capital accounting for 51%."

"Yes, that's about what I expected. Let's cooperate with China Resources then," Yang Wendong said.

Zou Wenhuai added: 'Okay, I have already negotiated with China Resources. When the mainland can be wholly owned in the future, we can buy it back at market price.'
However, there are two additional conditions in China. First, the projection equipment used by domestic cinemas must be domestically produced; imports are not permitted.

"They're trying to earn our foreign exchange." Yang Wendong instantly understood their intention and asked, "What's the quality of domestic projection equipment like?"

Zou Wenhuai shook his head and said, "It's not very good. I've been to existing cinemas in China and the picture quality is very poor. Even the sound is not very good. If it were shown in Hong Kong, the clients would probably curse us to death."

Yang Wendong then asked, "What has been the feedback like in mainland China?"

Zou Wenhuai said, "There are no problems on the mainland. They should be used to it and haven't been exposed to anything better."

“Then there’s no problem. Agree to their conditions and use domestic equipment.” Yang Wendong nodded and said, “Often, when we invest, we can’t think about other places with the mindset of doing business in Hong Kong.”

Currently in China, the prevailing sentiment is that the hope is for films to be shown in smaller cities. There's not a huge demand for quality; given the domestic economic situation, simply having access to movies is enough. It's impossible for every cinema to compete with Hong Kong. It's similar to how the screening quality of Hong Kong films can't compare to that of European and American films, right?

“That’s true,” Zou Wenhuai agreed. “The second requirement in China is that our cinemas need to bear a certain cost of going to rural areas.”

"Going to the countryside, is it similar to those open-air cinemas in rural Hong Kong in the 50s?" Yang Wendong asked rhetorically.
In his previous life, this post-80s generation man did indeed watch open-air movies in the countryside. He was a child at the time, and he was so happy when such movies were shown that he would walk several miles to watch them.

Zou Wenhuai said: "Yes, this is a regulation of the State Administration of Radio, Film and Television in mainland China. It is not targeted at us, but at all cinemas in the country. Under normal circumstances, cinemas are invested in by local governments and come with this obligation."

Our business is a joint venture, but since it's a cinema chain, we also have to shoulder this responsibility. I've discussed this with China Resources, and they've agreed. After calculation, the costs aren't much; the main expense is labor, and the films we use will inevitably be older films.

"Are there any requirements regarding the film?" Yang Wendong asked.

Zou Wenhuai said, "There are no strict requirements."

Yang Wendong asked, "So, does that mean Hong Kong films can do it too?"

“If it passes censorship and can be released domestically, then that should be fine.” Zou Wenhuai asked, “Mr. Yang, do you want to show our Hong Kong films in rural areas of the mainland?”

Yang Wendong nodded and said, "Yes, the market can be cultivated. If the cost is not too high, then countless people in the countryside of the mainland can watch more Hong Kong movies. Even if there is no direct benefit, it can still let them understand Hong Kong film culture."

Moreover, if some movies become truly popular, it will create significant opportunities for our actors. Although mainland China is poor, with such a large population, the demand for basic consumer goods remains high. Furthermore, I believe that the mainland economy will experience a qualitative leap within the next ten years, leading to even greater returns.

To put it simply, if several Hong Kong movie stars become popular in mainland China, their endorsement effect will be very significant.
This is similar to the situation in China during the 90s, when there were a lot of pirated movies and music, which ironically made many celebrities famous. However, after the crackdown on piracy in the 21st century, the popularity of celebrities actually declined.

“Okay, I’ll go arrange it right away,” Zou Wenhuai replied.

PS: Please give me a monthly ticket
(End of this chapter)